HOW TO CALCULATE AGRICULTURAL INCOME (AY 2019-20)
EXAMPLE 1 :
AGRICULTURAL INCOME = 300000
BUSINESS INCOME = 500000
WORKINGS
STEP 1 : TAX ON INCOME INCLUDING AGRICULTURE = 800000
FIRST 250000 = NIL
SECOND 250000= 12500 (250000*5%)
BALANCE 300000=60000 (300000*20%)
TOTAL TAX = 72500 (12500+60000)
STEP 2 : TAX ON AGRICULTURAL INCOME = 300000
ADD : BASIC EXEMPTION LIMIT OF AN INDIVIDUAL = 250000
( ASSUMED THAT THE INDIVIDUAL IS BELOW 60)
TOTAL INCOME = 550000
TAX ON TOTAL INCOME
FIRST 250000 = NIL
NEXT 250000 = 12500 (250000*5%)
BALANCE 50000 = 10000 (50000*20%)
TOTAL TAX = 22500 (12500+10000)
STEP 3 : DIFFERENCE BETWEEN 1 AND 2
BALANCE TAXABLE AMOUNT = 50000 (72500-22500)
TOTAL TAX = 50000
EDUCATION CESS = 2000 (4%)
TOTAL TAX LIABILITY = 52000 (50000+2000)
Author Bio
Why 2,50,000/- exempted twice in the second method.
Which method is correct?